- Publication date
- 17th July 2018
- Information type
- Policy area
The cap and floor regime is the regulated route for interconnector development in GB. There are three main stages to our cap and floor regime – the Initial Project Assessment (IPA), the Final Project Assessment (FPA) and the Post Construction Review (PCR). Following our IPA of the IFA2 interconnector we decided to grant the project a cap and floor regime in principle In July 2015.
The IFA2 project is being jointly developed by National Grid Interconnector Holdings (NGIH) and by RTE, the French transmission system operator. It will be a 1 GW interconnector between Chilling, Hampshire in England and Merville-Franceville-Plage in France. Our cap and floor regulatory regime applies to National Grid’s 50% share of the cost and revenues of the project.
As part of the FPA process, we conducted a cost assessment of the IFA2 project and set out our view on efficient expenditure which informs the project’s provisional cap and floor levels. We also provided confirmation of the cap and floor regime design as well as the financial parameters that apply to the IFA2 project.
This paper is our decision on the FPA of the IFA2 interconnector. This sets the provisional cap and floor levels at £50.7m and £27.6m (in 2016/17 prices). We will modify IFA2’s interconnector licence to give effect to our decision. We will then confirm the final cap and floor levels for the project prior to operation at our PCR stage.